Market Convinced Banks Will Be Nationalized, Freaks Out

Shares of banking stocks are dragging down the markets as investors become increasingly convinced that the banks will be nationalized, says Reuters. Investors are shunning the companies, worried that shareholders will be wiped out in a government takeover, and are fleeing to U.S. Government bonds and gold, which rose to above $1,000 an ounce.

Shares of Bank of America (BAC.N) tumbled more than 15 percent to $3.35, while Citigroup (C.N) slid more than 18 percent to $2.06. For a moment after the market open, Citi traded below $2, contributing to a 4.8 percent drop in the KBW Banks index .BKX.

“There’s a lack of confidence in the government to get us out of this and that has people sitting on their hands and not willing to buy,” said Matt McCall, president of Penn Financial Group in Ridgewood, New Jersey. “There’s that fear that we nationalize banks and this market gets killed.”

Apparently, even free-market Republican types are embracing the idea of bank nationalization. Reuters says that Alan Freaking Greenspan has “joined a growing list of experts who suggest nationalization is inevitable. “

‘It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring,’ Greenspan told the Financial Times in comments published on Wednesday.

‘I understand that once in a hundred years this is what you do,’ said Greenspan, a champion of free markets who is revered by many influential Republicans.

Well, they are insured by the NCUA. I don’t know much about it, but it sounds like the same basic principle as FDIC, but for Credit Unions. Hopefully the government stays away from them – I a member of two.

CU’s are filling the void with bank lending, but their applications are down. One bad thing is that they do use a ‘bank’ of sorts for their excess deposits. Guess what this ‘bank’ did with their deposits? They invested in sub-prime mortgage securities. Now the NCUA is charging CU’s a fee to help bail out their bank. Unfortunately, this fee would most likely reduce the working capital of credit unions and force mergers, liquidations, and reduced lending. Not good.

@tande04: oh yeah, & there is actually a big difference between NCUA & FDIC. FDIC is a quasi-corporation – they are not the chief regulators of banks. they insure banks & examine them, but the OCC & the OTS are the actual regulators. NCUA is BOTH the regulator & insurer of federally-chartered credit unions & is a federal agency (as opposed to FDIC which is not).

@laserjobs: Yup. The Fat Lady has sung. The b*tch is yammering for way too much cab fare to get home than she’s worth. Let the other shoe drop, nationalize them now so we can get a real look at their books, force their write-downs, infuse them (sigh, for a third time) and then spin them out and (hopefully) get (most) of our money back.

@ADismalScience: 3 depressingly crappy choices (Thanks, Greenspan!), but only #2 gives us some finality and certainly. Plus it will hurt those that should hurt in these situations in a Capitalist society, who thought that Risk was only a board game. It’ll hurt, but then we can crawl past this mess.
But yeah, they’re all crappy. What do you think?

I personally would opt for 3 – I’m not confident private entities can properly disentangle and ingest BAC/CIT. The RTC worked, and it worked for Indymac, but in terms of size/scope it’s like the difference between selling your used car and selling Ford. I think debt-backed assets will recover faster than anyone realizes and what people forget is that underneath all the writedowns lie revenue-positive corporations.

@ADismalScience: It’s the uncertainty that drives my “liking” #2 more. If we could appoint several philosopher-kings to value the assets and structure the program, etc., then I’d lean for #3. But there are so many areas on all three sides (buyer, seller and intermediary gov’t regime) for either institutional bias or mischief that I like the finality of seizing them, ripping open their books, then moving accordingly.
I do agree that there is some value, and some pretty large numbers therein. So it won’t be a write-off. But hearing that Lehman wanted $0.60/dollar when outside experts guesstimated $0.20, and Lehman refused makes me think the mark-to-market’s a lot more pessimistic than the bankers would like. I’d hate for taxpayers to bridge that spread.

@concordia: I really don’t understand people who go into gold under these conditions. Treasury bills, sure, but gold? On average it barely matches the rate of inflation; it’s a lousy investment. It’s also in the midst of a decade-long run-up in prices which looks suspiciously like a bubble.

Gold doesn’t even make sense from a survivalist standpoint. You can’t eat it or burn it or do anything useful with it. It’s only valuable because we’ve decided it is, based on its rareness and beauty. In a real disaster scenario it’s not going to be as valuable as barter goods.

@David Brodbeck: A decent percentage of survivalist/chicken little sites run ads for gold investments. Sure, some of the things they say (“be prepared”) make sense, but one has to wonder what is with the gold pushing.

@Barry White Stripes, Office LW: Does it? Let’s say the economy has collapsed, like it did in New Orleans after Hurricane Katrina. You go down to a store that has a stash of bottled water. Are they going to take your gold for it? Or are they going to want something they can actually use?

Gold is just another form of currency. It has value only because people agree it does. The only difference between it and fiat currency is that the supply of it isn’t controlled directly by an one government. (It’s ultimately controlled by guys with shovels.)

@David Brodbeck: “You go down to a store that has a stash of bottled water.” No, you don’t. If you are a gold buyer and you have taken possession of your purchases (rather than having them stored in a vault in New York by your broker), you know better than to run out of water. You use your gold to pay for a ticket out of town.

@David Brodbeck: You must listen to Dave Ramsey. I agree with much of what he says, but disagree with him on gold. Your (and his) Katrina example refers to an isolated economy collapse that is a temporary situation. Yes, in the initial aftermath of Katrina, gold is worthless. Bottled water, food, clothing, firearms – all worth much more.

However, look at it from a longer term perspective. Assuming new Orleans was it’s own country, had no outside help and was left on it’s own, very soon after the initial tragedy things would begin to settle down and people would move to a somewhat structured barter system out of necessity. If dollars were worthless, gold and silver would quickly take their place.

No matter what happens, gold and silver will always have value in some location on the globe, so anyone who can escape the chaotic region will be able to trade their precious metals for whatever they like.

These people are ridiculous. The government provided these companies with 5% interest loans to offset losses from “toxic” assets. If the banks get any money from those assets, it’s a plus. If they get nothing, the government money shields them from losses. Honestly it is beginning to look as if banks and traders are purposely creating gloom and fear in the hope of getting more cheap money out the government.

@Corporate_guy: Yes, its a bit of their own fault. We loaned them lots of money and they just sat on it and paid themselves lots of money. They were supposed to lend the money (not stupidly, mind you) to those who are appropriately qualified. Instead, they’re having a hypothermic reaction and letting themselves slowly die.

Bank nationalization has become a possibility because the market fears that it’s a possibility. The more they worry and act on those worries, the more likely it becomes. I think zentex sums it up nicely.

@Xerloq: No, not really. During the Savings & Loan crisis of the 1980s and 90s over 700 S&Ls became insolvent and were taken over by regulators. “Taken over by regulators” is nationalization by another name.

As part of the process, a special government entity called the Resolution Trust Corporation was formed. The purpose of the RTC was to dispose of, i.e.:liquidate, the assets of the failed S&Ls. And that’s exactly what they did. They sold, or “un-nationalized” if you like, the assets to private parties over a period of several years. Ergo, re-privatizing is not hard; it has been done before.

Lastly, no one is talking about a governement takeover of the banking system. What is being discussed is the takeover of a handful of large banks. Make no mistake, the banks in question are already functionally insolvent. They would already be bust if not for the capital infusions the Fed has already provided, plus the implicit guarantee of more taxpayer money. Put it this way: the package is already wrapped up. Explicit nationalization is just putting the bow on top.

@JiminyChristmas: The popular term for these has become “zombie banks.” They’re still walking around, but they’re actually dead.

This is a pretty damaging situation to allow to persist. First off, these banks are absorbing bailout money but aren’t putting much of it back into the economy. Secondly, the temptation for management to take a potentially expensive “hail Mary pass” type action to try to save the bank is high; if your institution is already doomed, why not try to rescue it with a risky last-ditch effort?

@David Brodbeck: @David Brodbeck: Actually yes the free market can get us out of this ditch – market’s self-correct, but it requires a span of time to do it. Unfortunately since the amount of time required to bounce back from a systemic collapse of the credit market is longer than an election cycle, our spineless idiot politicians in both parties would rather do something for the appearance of doing something than let the market fix itself.

How would have Government regulation prevented this problem in the first place? I hear a bunch of wankers bleat this line of “OMG DEREGULATION DID THIS” without any coherent, specific answer for how regulation would have stopped investors and bankers from blowing cash into bubble, a bubble started by the Fed slashing interest rates in the wake of 9/11 and the .com bust. Wait, isn’t the Fed supposed to be a regulatory body?

Idiocy caused the credit crisis, and no amount of regulation on Earth can eliminate any and all idiocy from a human activity, especially if it’s regulation written by politicians who are even bigger idiots than the financiers are.

@Aaron Stannard: I disagree on the impact. I think if we let them fail, the reverberations will be much longer and more prolonged than what we’re doing now. I think you’ll have a chain collapse of banking and the credit markets will become much worse than they already are. I’m not thrilled about what we’re doing and it pisses me off, but intellectually, I think its the lesser of two evils.

As to de-regulation. You don’t think that allowing the securitization of that many bad assets without the backing reserves to cover it couldn’t have been at least mitigated by regulations? Or to put them in a more regulated exchange? Or what if we had a regulation that stated that you must verify income and not just have “income stated?” You’re right, I can’t prove the negative with 100% certainity, but I think it would have helped.

@Aaron Stannard: Simple. Previously – we’re talking thousands of years, here – banking had built-in checks & balances. Banks made more the more loans they wrote; banks lost – and lost big – on defaults. Between those two rocky shoals lay reasonable growth and profits.
The deregulation broke that organic link, not replacing it with an equivalent one.
Keeping this broken scheme requires a boatload of regulation, so scrap it. It’s too difficult to oversee correctly and as recent history has shown, it doesn’t work.
That, and keeping leveraging down to sane amounts, and stopping 3rd-party CDSs would fix – and simply fix – most of the problems that cropped up recently.

@Trai_Dep: The ‘built-in checks & balances” that you mention was call gold. If a goldsmith (bank) lent out more than it had in the vault, they were toast. When their customers started using their deposits slips just in place of gold, the goldsmiths realized they could issue more ‘deposit’ slips than they had in gold (what we call fractional reserves today). That worked pretty well unless they got too greedy and issued too many deposit slips and people became suspicious and demanded their gold — the goldsmith was toast.

But now, we have the Federal Reserve and we’re off the gold standard. There is virtually NOTHING keeping the Fed (the lender of last resort) from printing as many note as they like.

We need to get back to the gold standard — and yes, there IS enough gold.

@Aaron Stannard: i would say the answer is to rebuild the walls that were torn down with GLB. imho, if those walls were still intact, this wouldn’t have been such an issue. PUT THEM BACK IN PLACE! commercial bankers have no business mixing with stock brokers & insurance underwriters. if the separation still existed today, do you think it could’ve gotten as bad as it did?

furthermore, i think we could’ve avoided a lot of this if the fed had quarantined banks instead of spreading the malaise. put a failed bank into the hands of a shaky bank & what do you get? a bigger failed bank. & now we’re at a point where there aren’t any bigger fish to stomach the poison pills we’re stuck with, so i guess we’ll get to eat it.

if nationalization is the answer, so be it. i think the fed needs to take a strong, hard look at the viability of mega-banks before they decide what to do with the mess. if i were playing puppetmaster, i would be slicing & dicing the big boys like martin yan at a wok-off.

so yeah, that’s my idea. restore the walls. restore strength to regional & local banks. say goodbye to “3 banks to rule them all”. the sooner it’s done, the better off we’ll all be.

@Xerloq: Therein lies my aversion to the current stimulus/bailout regimen: there are no sunsetting controls on all of the new spending and programs. If we need to, in the short term, pump up the banking industry, and the only way to effectively and quickly do this is to nationalize the banks, so be it. But such an undertaking should be, to borrow a phrase, “targeted, timely, and temprorary“

@Xerloq: Banks are already being nationalized. What do you think happens when the FDIC takes receivership of them and then processes them? That’s “nationalization”. The reason it’s such a hot-button issue with Citigroup and BoA is because of their size and political clout.

The means are already there. It’s high-time the government pulls the trigger.

And for those who say to just let them fail – take a look at mid-September, 2008 when Lehman Brothers was allowed to to just fail. The problem is that we allowed these things to become far too big, with far too much influence over every aspect of the world economy. Deregulation of securities did this, with a lot of help from Credit Ratings agency – who, in my opinion, have gotten FAR too little recognition of their culpability of this mess.

@Plates:
They don’t want to inspire confidence in the free market. Obama admits that he was fond of all the Marxist/Socialist groups in college.
Have any of you ever heard him mention a free market solution to anything? Has he ever given credit to the free market for doing anything?
You have to be an idiot to not realize that jobs are created in the market, by the market, and for the market. Jobs are not created to help the employees, they are created to help the people that put up their own money to start a business.

Obama just wants you to rely on the government for everything, thus enhancing his power.

@jsbeagle: Slavish devotion to free market principles are what got us here. You can’t drive a car out of a ditch the same way you drove it in.

What’s sad is if we’d allowed a little more government regulation in the past, we wouldn’t need such a massive intrusion of government into the markets now. The anti-regulation crowd shot themselves in both feet and then just kept pulling the trigger until the clip was empty.

@David Brodbeck: The problem is ideology. The concept that all government regulations are bad and privatization is always the best choice is part of the reason we got here. So even when someone presents reasonable regulations to prevent or mitigate, there’s an ideological reaction to oppose it rather than consider what its trying to accomplish and if there’s a there’s better way to do it.

This is nonsense. The United States economy is a heavily-regulated entity, guided by policies which are quite far from slavish devotion to free market principles. Even President Bush admitted that he “chucked aside [his] free market principles” in dealing with the economy, and most would argue that he and his party did this back in the first years of his administration. It is popular these days to employ your straw man argument that free market capitalism is a failed ideology and practice which is to blame for the current economic maladies, and that the cure must surely be a socialist/statist alternative. This is demonstrably false.

Free market capitalism did not cause this problem; the improper application of existing, reasonable regulation did. If you’re going to tinker with the markets with regulation, you have to be very responsible about it, and we have seen that a combination of poor execution (Chris Cox’s SEC) and misguided policy (Fanny & Freddie, gov’t-mandated sub-prime loan policies) so mangled the markets that the natural safeguards against self-destructive behavior were not applicable. Our leaders should be crafting a more limited but more responsible regulation scheme to correct this situation and to avoid it in the future, and should be somewhat chastened by the failures of their forebears.

Instead, we’re being sold a comprehensive, quasi-socialist Keynesian plan which imposes all manner of disruptive factors (bailouts of failed businesses, pay scale manipulations, etc.) which guide the economy in the direction of Western Europe. One simply needs to chart the relative economic prosperity and influence of the US vs. Europe for the last, say, century, to see that the European model is not one we want to emulate, especially given the rise of near-peer competitors like China and India. Of course, this assumes that your goal is to perpetuate the US economic leadership which not only produced more wealth for more of the world than any system in human history, but has also been the world’s finest engine of innovation and technological progress. Perhaps this is not a shared goal.

As I witness the current movement to take advantage of an economic crisis as a means to force a restructuring of the economy that otherwise would never be accepted, I take some comfort in historical precedent. Capitalism’s detractors predicted the death of the American system during every crisis in the last century, and have done their best to replace it with inferior, redistributionist, anti-competitive models. Every time, the system not only rebounded but became more powerful, proving these critics to be wrong and completely irrelevant.

@AtomicPlayboy: And captalism’s defenders are always quickly out of the gate yelling about “socialism”.

I realize that conservatives and a strain of Libertarian believe that the world is completely binary – either free-markets rule or it’s all socialism. Unfortunately, this is a very simplistic attitude and simply does not exist in nature – human or mother. Crisis only shows this truth in stark relief. We are here not because of some conspiracy to rid the world of free-market principals, or to drive us into what you believe are the ills of European society (a premise I would also argue, but don’t want to waste time on). Nor are we here because we bought whole-sale into those principals. We’re here because of the human nature of greed. Greed made people make up contracts that didn’t show the true cost of a house. Greed made the signers of the contract believe they would always be able to afford more than they could chew. Greed made some more people decide they would sell those contracts to other people as “securities”, while even more greed made other people bet those securities would fail.

I’m not railing on a moralistic level, even though that’s what it appears. But Thomas Paine had it right back in 1776 – “Society is produced by our wants, and government by wickedness; the former promotes our happiness positively by uniting our affections, the latter negatively by restraining our vices.” Those words are still true today, as they will always will be. The greed in our society has driven us to the cliff. It will be up to the government – yes, our democratically elected government – to bring us back.

@Faust: You’ve made a bunch of points which have nothing to do with my argument.

I don’t believe that the current situation was caused by some socialist conspiracy, and never said anything like that. I do, however, believe that the current situation will be exacerbated by said, as they seek to manipulate the crisis as a vehicle to advance a communitarian, redistributionist agenda.

Also, in no way did I imply that the world, or the economy, is a binary entity. If you actually read my post, you would see that I actually advocate regulation (see: “existing, reasonable” above), I just want it to be minimal and effective.

You may argue with straw men if that provides a venue in which to expound your world view, but you’re not saying anything here that actually challenges my argument.

@AtomicPlayboy: Even President Bush admitted that he “chucked aside [his] free market principles” in dealing with the economy, and most would argue that he and his party did this back in the first years of his administration.

I love how conservatives idolized Bush when he was popular, then suddenly decided he wasn’t a “real conservative” when things went badly.

The various “NINJA” and Option ARM style loan products that created this problem were not government-backed or mandated. I know conservatives like to blame this on anti-redlining regulations but that just doesn’t pass the laugh test. Banks were making these loans because they were making massive profits off them, not because the government was forcing them to. (Since when does the government have to force anyone to do something profitable?) They even went so far as to collude with appraisers in order to make properties appear more valuable than they really were, so they could underwrite larger loans on them. They could then turn around and sell those loans on largely unregulated financial markets.

@David Brodbeck: Again, it seems we’ve got a crowd today that wants to misattribute views to others and then argue against these made-up positions.

What is the relationship between my description of President Bush’s (early) abandonment of free market conservatism and your description of a vacillating conservative abandonment of a formerly popular President? I’m explicitly stating that I believe that Bush was not a free-market-friendly leader, and implicitly stating that his abandonment of the free market policies I support was part of the problem from the beginning. One might interpret that as something less than idolization, maybe even criticism.

I mentioned him as a way of illustrating to you that, from the top down, there was never the “slavish devotion to free market principles” that you propose. How does this make me a cheerleader for Bush who only turned against him when the economy tanked? Your response doesn’t make any sense, unless its purpose was simply to take a swipe at Bush and/or conservatives. If you meet a few libertarians/conservatives, and find yourself able to argue with them a little better than you’ve demonstrated here, you’ll find that we’re anything but “slavish” and don’t tend to “idolize” anyone.

@mac-phisto: I’d love to remove some of the protections you reference which allow corporations to indulge in some of the awful behavior we’ve seen, but the problem is that these same protections are the means by which business owners/entrepreneurs can flourish in high-risk markets. The corporation as an organizational entity is a vehicle for individuals to launch businesses without having to shoulder all of the financial and legal risk all by themselves. Without some of the protections (e.g. bankruptcy) that corporations are granted, the risk threshold for starting a business would be too high, which would discourage entrepreneurship and innovation. Any competing system which puts fewer restrictions on corporations will draw all of the talent and capital away from a comparatively restrictive one.

Unfortunately, the diversification of risk and the abstraction of officers and board members from shareholders can lead to corporate malfeasance, but that will always be a necessary evil in a system which encourages a less-fettered invisible hand. The corporation enables greedy, unscrupulous people to be extremely successful; it also has enabled a meritocratic, innovative economy which generates wealth and opportunity for the entrepreneur, worker, and investor alike. A balanced, judicious, and minimalist regulatory scheme can encourage the best while reining in the worst. We haven’t had one of those in a long time, and I fear that the current surge in anti-corporatism will produce something even worse.

So: any ideas? Not really, just more of what we saw in, say, the mid nineties, but now informed by the lessons we learned from the dot com bubble and the this sub-prime fiasco.

@Plates: Confidence was destroyed by the banks. The U.S. government provided them with loans to offset their losses. The problem is fixed. Anyone claiming it is not just wants to scare the government into giving more cheap loans.

@Plates: Nice try. Yes confidence is a component of the market, but if the fundamentals are bad, no amount of confidence is going to get you out of it. That’s how we got in this mess in the first place, lots of confidence, no fundamentals. Eventually the charade ended and people realized how buggered we are. Obama is just trying to figure a way out. We can disagree on what the best way is, but don’t say this is all Obama’s fault.

@Plates: Yup, nothing to see here and the Finanapocalypse is a figment of The Daily Kos’ imagination.
So, you’re going to do the heroic, non-herd thing and buy up bank stocks with your own money? Put your money where your mouth is?

@lodleader: Yup. Because he actually allows facts on the ground to affect his previously faith-based thinking and admit his previous schema was fanciful. Too bad he had to destroy the global economy before he could admit he was wrong.
Critical thinking is definitely something that will get you booted from the Republican club. Thanks for admitting it, though!

I’ve come to realize the difference between the conservative/libertarian mind and the liberal – the conservative believes that there is a “daddy” or a single person who will solve everything. That belief is so ingrained that they project it onto everyone else, believing that everyone else also believes in this. That person – King, Dictator, Ruler, whatever you want to call him – is the leader and they just know.

The liberal mind believes that facts and reason will solve a problem, and if it takes one person, or many – well, that’s okay. Because we all have a stake in this.

Just something that came into mind. For the record, I did vote for Obama. But I also voted for a lot of other Democrats, because while maybe they don’t have all the answers and maybe they won’t fix all the problems – at least they know there are problems, and that sticking one finger into an exploding dam while sucking on your thumb hoping it all goes away isn’t a fix.

you both are mistaken, there isn’t a generalization that can be applied to one side or the other. it’s the people who make biased statements like you just did who behave based on emotion rather than reason

@DaoKaioshin: Oh that’s interesting. I guess you don’t have any political biases. Yes, you must be completely objective in all areas.

I’m not sure what in my post convinced you that I was being “biased”. I didn’t place my own value judgments on people who are more paternalistic than maternalistic. I didn’t say that fear was a bad reason upon which to make decisions. I only stated what I had read in studies. Personally, I think emotion, including fear, is just as valid a basis to make decisions as reason is, although in all cases, I would prefer that they temper each other.

I have a hard time believing that the government is going to nationalize the major banks (Citi, BOA, possible Wells). There’s been a number of articles arguing both sides of this over on seekingalpha.com, but I firmly believe that the government pushed BOA into making the Merrill purchase and that they’re going to continue to receive preferential treatment.

@speeddaimon: I think you’re right. Nationalization, even temporary, is just too politically untenable. Unfortunately, that means we’ll get something pseudo-nationalized which is less efficient than either a fully private or fully nationalized entity. No doubt the risks will all be borne by taxpayers while private bond holders get all the upside.

@speeddaimon: I would believe it. Citi’s current market cap is about $11billion. The US government has put over $50billion in bailout funds into Citi since November 2008. Seems to me the government already owns Citi. Same deal with BofA, market cap = $17billion, bailout funds = $45billion.

@JiminyChristmas: You’re right about the market caps of course. I’m having problems imagining the landscape of the stock market, bond markets, and securitization markets, if the government seizes control of these banks over the weekend. It’d be a financial catastrophe (at least for a little while). I’m not saying its the wrong move, I’m just saying that our government doesn’t have the sac for it.

@Dan Seitz: Sure, its a self fulfilling prophecy. Rumor gets out about insolvency and a lack of capital, there is a run on the bank and everyone moves their money resulting in, well, a lack of capital. Whammo, failure.

Shut down the news service for 1 month….and you will see a comback immediately…

Completely agree, and have said this from the beginning. I would not actually advocate an government intrusion into the mass media, but I firmly believe that if there were not a constant media bleat of doom and gloom (the President is not helping here, either), consumers would act completely differently.

Here’s a thought experiment: say you completely ignore the news for 3 months (including Consumerist et al). Would your buying/saving patterns stay the same as they were before your media blackout? Absolutely, unless something actually happened to you during that time, like a layoff or a depression of your own investments’ value.
As soon as you turn the news back on, you’re inundated with warnings to stop spending, worry about your financial security, etc. because of general trends in the economy which may have no affect on you, ever. At that point you probably do start changing your habits, along with everyone else, which then fulfills the media prophecy. Ugh.

@AtomicPlayboy: Considering that accurate information is the cornerstone of all economic models, isn’t censoring antithetical to a market-based economy? Or, just information sources that you, in your wisdom, deem unworthy?
Geezus, that’s the most elitist thing I’ve heard in a while…

@holocron: Damned straight: I’m sure the current administration will have no problem erasing the security policies which kept the country safe from terrorist attacks throughout the post-911 Bush years.

@AtomicPlayboy: I’m pretty skeptical of the “Bush kept us safe” argument. 9/11 was seven and a half years ago — less than the span of time between the 1993 World Trade Center bombings and 9/11. You could argue equally well that Clinton’s security policies kept us safe for all that time, and he didn’t shred civil liberties to do it.

I’m not arguing that Clinton’s policies were particularly helpful, just that saying “he kept us safe for X years” doesn’t prove anything.

@David Brodbeck: Try and remember the sentiment on 9/12/01, and tell me whether you would believe me if I had told you that the country would not bear any subsequent attacks for the next seven+ years. It strains credulity to assert that Al Qaeda and its cohort have not attempted subsequent major attacks (cf. shoe bomber, liquid-explosive bombers) or that the current security apparatus did nothing to prevent these attacks from being successful. It is also fallacious and silly to describe said security regime as “shredding civil liberties”, since not a single violation of any American’s civil liberties has been exposed. Also, your comparison to Clinton-era policies is a classic conflation of correlation with causation, and in no way challenges my argument.

No need to rehash the tired “Bush scared us so he could spy on us/Terrorism really isn’t a big threat/etc.” line of childishly naive argument here. My reply to holocron that he should be wary of rolling back everything done during the Bush years is rather strongly supported by the current president’s embrace of nearly every Bush-era security policy to which I attribute our domestic safety. I can only hope that the President Obama continues to ignore his base, to abandon his campaign promises, and to continue the sober and moderate security policies such as FISA, rendition, etc. that he has quietly retained.

@AtomicPlayboy: Apparently you forget that a terrorist attack did happen after 9/12/2001 – when envelopes of Anthrax was sent to multiple people, including Tom Daschle, the Senate Dem Majority leader, as well as newsrooms across the country. An attack, by the way, that has never been solved to this day.

I remember 9/12/2001 very well. No I didn’t, actually, believe there would be an attack on a similar scale in the US. I knew on Sept 11th the response that George Bush would give, though I didn’t imagine he’d be so successful in conflating Al Queda with Saddam Hussein to attach Iraq. I’m not as naive anymore.

However, certainly there have been many other such attacks in other countries, such as Spain. But if we’re forgetting about the anthrax attacks, then of course foreigners don’t count.

Regarding your assertion that no American citizen’s civil liberties have been “exposed”, I have to assume that you’re not familiar with Jose Padilla. An American citizen held on a military ship’s brig for close to 5 years without trial, with his Habeas Corpus rights continually denied until a showdown with the Supreme Court reinstated them. Or about the round-up of hundreds of Muslim-Americans immediately after the attack on Sept 11th. But then, they probably don’t count, either…

@AtomicPlayboy: i have to be honest here…if anything, i think our nation has become more susceptible to attack. the ridiculous display we saw in new orleans is a perfect example of how inept our government has become at responding to emergencies.

are we really safer today than we were then? who can honestly say?

i’m reminded of my 5th grade history class. the soviet union was collapsing on itself & my teacher asked, “do you feel safer today, now that the threat of nuclear war is over?”

my response was that i actually felt less safe b/c the people in charge of securing the nukes weren’t being paid anymore. nuclear war wasn’t a threat so long as mutually assured destruction existed as a principle & now that was all gone. (i know that seems like a lot for a 5th grader to come up with. i didn’t – i was reading a lot of tom clancy at the time, ‘war games’ was one of my favorite movies). he actually laughed at me & called my observation ridiculous.

low & behold, 2 decades later we’re forming a subcommittee to prepare for the threat of terrorist WMD attacks. we’re warming up a war with the iranians. 3 new nations have birthed the bomb – 2 that hate each other & 1 that hates us. top that off with an unstable russia run by crime lords & it’s not so ridiculous anymore, is it?

i guess that’s just a drawn-out way of saying that seeming safer =/= being safer. are we safer today than we were in 2001? perhaps. perhaps not.

@mac-phisto: Good points, all.
I would simply restate that our country did not suffer a major attack during the Bush years post 9/11 (no, the anthrax attack, which was nearly simultaneous and of an entirely different shape and size, does not count here), and it’s not because our rather resourceful enemies didn’t try. We haven’t known it at the time, but the answer to your question “are we safer today than we were in 2001?”, has been “yes” for every day of the last seven years.

@Trai_Dep: And, now that more US citizens have died in Iraq than the WTC, and 10x of those wounded/maimed, you can chalk those up to Bush’s Keeping Americans Safe score as well. Not fail, but EPIC fail.

@Trai_Dep: I made the mistake of actually reading one of your posts, which I have avoided for the last several months, due to the fact that you are an insufferable, trolling crank. I will not do so again, so you could save yourself some time by no longer posting your hare-brained, childish replies to my comments. Somehow, I doubt that you will, as I’m guessing you derive some pleasure from negative response to your drive-by idiocy. Your call.

@jsbeagle: Yeah, that Obama — so silly for thinking that laissez-faire conservative government and the unfettered free market causes economic problems. Think about how awesome the economy was after 12 years of conservative policies in 1992 and after 8 years in 2008!

Well, #$@%, indeed. I’m supposed to be getting married here. We went and picked out wedding rings. The prices posted were given old gold prices, so the salesman says he’ll check it out and call me with the quote.

Two relatively basic wedding bands are on the verge of running us $1000. Our budget is *half* that.

All because of idiots trying to “invest” in gold despite the fact that its long-term prospects are and always have been totally dismal.

@Repique: Go for Titanium, it looks awesome on a men’s ring, is lightweight, and is indestructible. Just don’t get fat, it can’t be re-sized and if it gets stuck they have to cut it off with a grinder. On the plus side their are a lot of really nice looking Titanium with Platinum inlays.

@HiPwr: When you set things up to fail, starve them and don’t give them authority to do anything, then yes, they will f*ck up. That’s the dirty little secret. They try to make them fail, then shine a spotlight on how bad they are and say we need to privatize or get rid of them completely. If you funded them, gave them appropriate authority, put competent people in charge (rather than the guy that raised a lot of money for you), and didn’t try to meddle with them based on your own ideology, then they aren’t so bad.

@ARP: Politicians and beaurocrats deciding who is worthy of loans and how much is a recipe for corruption and abuse. I can’t think of a single government entity that isn’t touched by political influence and/or ideology.

My hat’s off to Obama. He has this country right where he wants it. Heck, we’re already more communist than China is. Before long, China and India will be outsourcing tech jobs and manufacturing to the US. lol

A self-fulfilling prophecy. I heard a local banker on the radio this morning just FREAKING, and he was with a straight face saying ALL banks, and not a FEW banks, would be nationalized. Completely irrational.

It is this kind of disconnected thought process that got us into this mess.

There is a lot of confusion out there on what is nationalization and what isn’t, and what all this means. I wish Consumerist would, at least, try to educate a little instead of just feeding the confusion.

Replace “nationalize” with “receivership”, and this becomes just a standard procedure (granted, at a large scale) that has already happened with banks such as Washington Mutual:

“TOKYO – The Obama administration is committing huge sums of money to rescuing banks, but the veterans of Japan’s banking crisis have three words for the Americans: more money, faster.

The Japanese have been here before. They endured a “lost decade” of economic stagnation in the 1990s as their banks labored under crippling debt, and successive governments wasted trillions of yen on half-measures.

Only in 2003 did the government finally take the actions that helped lead to a recovery: forcing major banks to submit to merciless audits and declare bad debts; spending two trillion yen to effectively nationalize a major bank, wiping out its shareholders; and allowing weaker banks to fail.”